Arrays of position-sensitive virtual Frisch-grid CdZnTe (CZT) detectors offer an economical approach to make high-efficiency and high energy-resolution gamma cameras for spectroscopy and imaging of radioactive sources. There are many application areas for such instruments including gamma-ray astronomy, medical and industrial imaging, environmental cleanup, nonproliferation and nuclear safeguards. Here, we present the design and results from testing of a 4x4 array mounted on a fanout substrate coupled to a front-end ASIC. The current array houses up to 16 detectors with a cross section of 6x6 mm3 and thickness of 2 cm. However, the array’s design provides flexibility to extend its dimensions in conjunction with the opportunity to replace faulty individual detectors or higher-performing detectors with thicknesses potentially increased up to 4 cm. Each detector is encapsulated inside an ultra-thin polyester shell and furnished with 5 mm-wide charge-sensing pads placed near the anode. For each gamma-ray event the signals on the pads are converted into X-Y coordinates and combined with the cathode signals (for the Z coordinates) to give 3D positional information of all interaction points, which provides a high-spatial-resolution imaging capability for the array. Moreover, the positional information can be used to correct for the detectors’ response non-uniformities due to the presence of crystalline defects, which, in turn, allows the developers to use relatively economical standard-grade (unselected) CZT crystals, while retaining the high spectroscopic performance comparable to the large-volume pixelated detectors produced from more expensive monolithic CZT crystals.